An additional benefit of a detailed engineering-based Cost Segregation Study is that it can increase potential insurance premium savings as well as provide support for the property tax appeals process.

What are you trying to accomplish, what’s the upside to fight all the additional downsides I’ve pointed out?

@Joe Michaels, What a lot of investors will do is to use the 1031 exchange as @Michael Plaks said, isto actually "acquire" additional depreciable basis. 

We're building an addition onto our primary residence and have a choice between adding one 8x12 master bathroom or splitting that same space to have 2 en suites (each 8x6), with one coming off the master bedroom and the other coming off another bedroom.

Since they are considering renting their properties out, sell them on the concept of getting consistent cashflow from you - without the hassles of being a landlord.You will then need to make sure you can make those monthly payments EVERY month in addition to do remodels.

It could give you peace of mind as you focus on your family and move to your new home, without the additional stress of managing a second property from afar.Best of luck with your decision! 

Are you cashing out the equity and using additional revenue streams to get the 2nd one?

Additionally, your parents might consider a reverse exchange, where they purchase the replacement property first and then sell the relinquished property.

Quote from @Jaycee Greene: A few things I noticed, in addition to having the tenant pay the utilities are:1) Incorporate annual increases in rent higher than 2% (in your area, maybe 4%-5%) with a slightly smaller increase in operating expenses (say 2%-3%)2) With a gut rehab, I'm not sure why you need to spend $128/month on cap ex, at least for the first year or 2.3a) An 80% cash out refi is probably going to be hard to get.

I was drawn to real estate as a way of investing money I have saved up (around $130K with additional funds to leverage out of a 401K if needed), and potentially creating reliable cash flow over the next 10 years.